YRC Worldwide won a reprieve from its lenders, who on Jan. 31 extended the due date for $69.4 million in long-term debt and sealed a deal to cover that amount and more debt through a $300 million debt-for-stock swap completed today.
Now the $4.9 billion trucking holding company, the second-largest less-than-truckload operator, needs to refinance its remaining $1.15 billion in long-term debt and double down on efforts to improve its long-haul LTL unit, YRC Freight.
The company’s lenders agreed to extend a Feb. 1 deadline for repayment of $69.4 million in debt to Feb. 13. Proceeds from the $300 million debt-for-equity exchange will cover that debt, said YRC CFO Jamie Pierson.
The $69.4 million that matures Feb. 15 “goes away and is off the table,” thanks to the debt-for-equity transaction, Pierson said in an interview Jan. 31, as well as all of the company’s Series A notes that would come due in March 2015.
The debt-for-equity swap converts $50 million of Series B notes due in 2015 to stock, leaving about $20 million in Series B notes outstanding, he said.
The agreement allows YRC “to move forward with the final step in the company’s capital structure transformation, which is refinancing the senior portion of our debt,” said Pierson. He expects to compete that step in mid- to late-February.
The company is negotiating with its lenders to secure a $450 million asset-backed loan and $700 million term loan facility.
The “capital structure transformation” was made possible by the 19,000 YRC Teamsters employees who voted Jan. 25 and 26 to accept a contract proposal that extended wage and pension concessions, first agreed to in 2009, through 2019.
YRC’s lenders made extension of a 15 percent wage cut and a 75 percent reduction in company pension contributions a prerequisite to any refinancing deal.